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Online merchants will be faced with the decision of whether to offer discounts. Today we’re teaching how to use coupons for E-commerce business
Offering discounts for your online store can be a powerful weapon in your conversion arsenal, however, used haphazardly, and you can do significant damage to your brand or worse, become unprofitable.
In this post, we’ll review some of the pros and cons of offering deals for your online store, look at some of the most popular ways you can use discounts to drive conversions and, of course, how to most effectively use them.
Let’s dive in.
Note: For the purpose of this blog post and keeping things simple, we’ll refer to coupons, discount and deals all as offers.
Before we jump into some different ways you can effectively use offers to help increase customer loyalty and acquisition, let’s first look at some of the pros and cons of utilizing offers for your online store:
As mentioned previously, online store offers can be an effective tool for not only customer acquisition but also for customer loyalty, however, it’s important to consider your overall brand strategy before you begin offering discounts.
If you want to position yourself as a higher-end brand or if you have slimmer margins, you may want to consider sticking to customer loyalty type offers as opposed to weekly sales. On the other hand, if you have healthy margins deep discounting and daily/weekly sales might be better for hitting your goals.
Ultimately, you need to consider if offers and the type of offer is the right strategy for your brand. Regardless, building an online business will generally involve a lot of experimentation to understand what works best. The best approach is to choose a goal for every campaign and offer, start small, and measure the results.
There are several overall types of discounts and offers you have at your disposal. Let’s take a look at the most common:
The most popular way to offer discounts is percentage-based discounts. This can include small incentive percentages like 5% or 10% off, larger discount to really drive sales like 20%, and 25% or large percentages like 50%+ to liquidate merchandise that isn’t moving or old.
Offers that are based on a dollar value can be positioned as a credit. This makes people feel like they’re wasting money if they don’t use it. In some studies, the redemption of dollar-based offers vs. percentage based offers can be as much as 175% greater.
Shipping costs are often cited as the number one reason for shopping cart abandonment. Offering free shipping is a great way to mitigate this and increase conversions. Often this is used in conjunction with a minimum order size to help increase the average order value.
A free gift with a purchase can be a great way to provide additional value to a customer. If used strategically, it can also be used to increase average order size and/or to get rid of a product that isn’t moving.
There are a hundred and one ways you can use sales, offers, discounts, and deals to drive customer acquisition and conversions. Let’s take a look at some of the most popular ways below along with an example for each:
1. Weekly/Monthly Offers to Drive Sales and Meet Revenue Goals – These are traditional sales used to drive increased sales. Many times sales are used at the end of a month or quarter to increase revenues to meet projections and goals.
2. Prelaunch Offers – If you’re still in the prelaunch stage of your business or maybe even launching a new product, you can use prelaunch offers to help drive traffic and peak interest.
3. Holiday/Season Offers – Black Friday, Christmas and New years are the big ones, but the whole year is sprinkled with holidays that you can use to stretch revenues with offers.
4. Abandon Cart Offers – With close to 70% of all people abandoning their carts, abandon cart email offers can be a powerful tactic to bring those people back.
5. Email/Newsletter Subscription Offer – As you probably already know, building an email list is extremely important for online retailers. By providing an offer in exchange for visitors emails address, not only do you increase the chance of a conversion, but you also get their email, providing you with the opportunity to market new products and offers to them in the future.
6. Offers for Liking, Following and Sharing On Social – One of the hardest parts of running a new online store is getting word out. Giving visitors and customers an incentive to share your store with their social circles can be an effective way to create some inexpensive word of mouth.
7. Referral Offers – People are much more likely to purchase from you if referred by a friend or family member. Use this to your advantage and use offers to encourage referrals. You can choose to give a deal to the person referring, the person being referred or both.
8. First Time Shopper Offer – Providing a first timers offer could be just the nudge those first-time visitor needs to be converted to a paying customer.
9. Volume/Cart Size Offer – An offer based on the total value of a shopping cart is an effective upselling tactic to encourage customers to spend more, increasing your average order size. A strategic way to incorporate this into your online store is to calculate your average order value for the previous few months and offer a discount or free shipping on all order 10-20% over your average order value.
10. Exclusive Social Offers – Exclusive offers on your social networks can be a great way to build a strong relationship with those that follow you as well as provide a reason for new people to follow and subscribe to your social channels, which will allow you to market to them in the future.
11. Customer Loyalty Offers – Rewarding customer loyalty can help build an even stronger bond while also only providing discounts to customers that already spend money with your online store. It can be as simple as sending your best customers a personal email with a discount or credit.
12. Exit Intent Offer – Sometimes all it takes for to convert a visitor to a customer is a last second offer before they leave. An exit intent offer will popup just as your visitor is about to leave your site or close the tab, presenting them with a final offer to purchase.
13. Retargeting Offer – Retargeting offers are effective because they’re only shown to people that have been on your site before so they already know who you are. The ads serve as a reminder to come back and the offer serves as a nudge to purchase.
14. Influencer Offers (Bloggers, Celebrities etc.) – Partnering with influential people that have large audiences is a great way to increase exposure to your brand and by providing an exclusive offer to the influentials persons network, you’re more likely to convert their fans to your customers.
Offers and discounts aren’t right for every online business, however, with a clear goal in mind, a firm understanding of the brand and some experimentation, you can most effectively utilize offers to meet your objectives, building customer loyalty and increasing revenues.
Tell us in the comments what offers has worked best for your online store and what you have found as the best channels to promote your offers.